Commercialisation

Commercialising and Scaling the Solution

There are no straight lines in nature or business.

— Verne Harnish, CEO of Scaling Up and Founder of the Young Entrepreneurs' Organisation

According to Steve Blank, this Phase “transitions the organisation from one designed for learning and discovery to a well-oiled machine engineered for execution. ” This is true for any transition – from a Startup to an established organisation or from a project team to a new department. Anyways, the role and the tasks of the founders will change in this stage of the Innovation Process.

New tasks ahead

Company building, strategy, and leadership will subsequently substitute working hands on the solution, idea or product. The organisation’s structure and processes need to be further defined and established to set the stage for growth. That means defining roles, creating departments and processes that help scaling and hiring the right people that complement the already existing team’s skill-set well and enrich them. Remaining agile is a top priority. Thus it is essential to avoid strict hierarchies with too much bureaucracy.

Creating and establishing the culture is as important as expanding the structure of the organisation. These activities include defining a crystal clear purpose-, mission- and vision statement and a list of values that shape the company’s or department’s culture. In the case of a department, it is crucial to regard an already existing corporate culture to avoid the creation of silos with unwanted adverse side effects.

Effective communication is another key to business success. It strengthens the connections between all stakeholders and helps that all elements act in concert. Transparency and regular updates help to avoid information asymmetries. Everybody needs to fundamentally understand the mission, the objectives, and the strategy of the company or department.

Success factor People Management

Being a hands-on-manager, though, and spending more time on people management might be an underestimated success factor. Findings of a field study of 100 fast-growing Indian technology startups “Learning to Manage: A Field Experiment in the Indian Startup Ecosystem” (by Rembrand Koning (Harvard Business School), Aaron Chatterji and Sharique Hasan (Duke University’s Fuqua School of Business), Solene M. Delecourt (Stanford’s Graduate School of Business)) support this view. Allocating more time to regularly exchange with employees on progress and goals and provide insight is worthwhile, especially when newcomers will better understand corporate objectives, corporate culture, organization, and processes.

Crossing the Chasm

The Commercialisation Phase involves a switch of the focus from a Development-Team-Centric to a Mission-Centric approach (at a later stage, if the venture evolves into a large venture, it needs to become Process-Centric with repeatable and scalable business processes). One central aspect of The Mission is to scale up and concentrate on crossing the Chasm (as defined by Geoffrey A. Moore in his book “Crossing the Chasm”) between the early adopters to the mainstream customers or users. The Innovation Adoption Model divides mainstream users into three groups:

The Early Majority (Pragmatists)

34%

The Late Majority (Conservatives)

34%

The Laggards (Sceptics)

16%

Together they make up for 84% share of the total market. The Chasm, a credibility gap exists because of specific differences in the Early Adopters and the Early Majority’s psychographics. Usually, one group acts as Evangelist or Reference for the next, but this does not work due to the Chasm. Early Adopters are Visionaries while the Early Majority are Pragmatists, which means not entirely compatible for effective distribution. The latter are happy to wait and see how the solution fares before they start adopting it. Credibility and references are essential to convince them of the value of the solutions. And 16% market share is not nearly enough to achieve this. The Chasm itself comes in different widths depending on the market’s type (new, existing, or re-segmented). While a wide chasm might make the diffusion of the idea or solution in a new market more complicated, the Chasm might be more narrow in the other market types. A variety of options exists to reach the tipping point and accelerate the distribution. First of all, developing a substantial number of references will help to close the credibility gap for the mainstream customers. Collateral like procedure documentation goes beyond marketing and is easier to access, especially for pragmatics. Marketing, specifically dedicated to the different groups’ psychographics, will fertilise the ground for the subsequent sales activities. Other options could be focussing on a market niche to take a “Big Fish in a Small Pond” approach. Winning a 50% market share in a niche is more convincing than 5% in the overall market. Another option is partnering to extend the potential user base.

The Road goes on and on and…

Upon reaching the tipping point, the solution achieves mainstream status. The focus shifts even more from short to long-term questions, which means addressing efficiency through becoming more process-centric. The innovation process comes to an end, only to begin anew with another problem or another bright idea, with all its pitfalls and moments of joy. It makes the world turn.